Rolling coverage and reaction, as the rouble recovers on hopes of central bank action, and the US non-farm payrolls report is strong, adding to the likelihood of the Fed being the first major central bank to hike interest rates 5.54pm GMT Over to Greece where government leaders are expressing optimism that the debt-stricken country is inching ever closer to exiting its EU-IMF sponsored bailout programme. From Athens our correspondent Helena Smith reports:Hours after euro area finance ministers agreed to consider throwing Greece a precautionary credit line, Athens deputy prime minister Evangelos Venizelos said the decision had effectively launched the countrys exit from often onerous international supervision. The eurogroup meeting fits absolutely with our planning, he told reporters, reiterating that the governments aim was to strike a deal with lenders by years end. The goal is to have left the regime of the memorandum and troika [oversight] and to have returned to [having] a status of essential equality in the eurozone without emergency mechanisms such as the troika. There will be nothing better. 5.37pm GMT There was a two way pull on the market, with early gains after the ECBs hints on Thursday of further action to help the struggling eurozone economy. But worries about further Russian incursions into Ukraine, not to mention a volatile rouble, punctured the optimism, and worries about a slowdown in the banking sector with poor loan growth did not help matters. A revival in mining shares helped keep the UK market in positive terrritory, but elsewhere the picture was more negative. The final scores showed: 4.48pm GMT Martin Wolf brings the session to an end by saying: We dont seem to have reached 100% consensus on all subjects and says another symposium next year might be needed to resolve outstanding issues. 4.43pm GMT Speaking on the issue of whether the euro should have devalued, the ECBs Benoit Coeure said that, given the large eurozone current account surplus, it was not clear that a weaker euro was the right solution to growth problems. 4.37pm GMT First interesting comment heard from the Bank of France conf: Coeure says that if instruments don't work on inflation, will try others #ECBECB's Coeure: If ECB measures don't boost inflation, it must find other ones. Must meet 2% inflation target | http://t.co/E7oiUiMQzI 4.23pm GMT Now to questions, and asked about fiscal policy structures, Janet Yellen said: In thinking about fiscal policy, having a long term target for sustainable debt to GDP is important.The IMFs Christine Lagarde said EU fiscal goals may need a rethink and a reset, given how the situation has evolved. 4.14pm GMT ECB board member Benoit Coeure said at the Paris symposium that eurozone leaders needed to take steps on structural reform at their December meeting.He said monetary policy should be used where possible to get inflation back to 2%.#ECBs Coeure: Sees Limited Scope For Global MonPol Co-Ordination#ECBs Coeure: Eurozone Has Limited Fiscal Space, Faces Challenges To L-Term GrowthAfter @ecb's Coeure's speech, Martin Wolf says: Now let's move on to "a functioning federation" w/ a "more or less legitimate government" 3.56pm GMT Banks were responsible for the financial crisis, says Raghuram Rajan, governor of the Reserve Bank of India at the Paris symposium, but he wondered whether regulation had now gone too far and was hurting risk taking.He said: Banks have cried wolf too often so they have very little credibilty when they cry wolf again. But equally they are now stepping away from risks, he said. This could harm economic growth, so a balance needed to be found. 3.48pm GMT More from Federal Reserve chair Janet Yellen at the Paris symposium (from her yet to be delivered comments), courtesy Reuters:Yellen said politicians across the globe should make sure their fiscal houses are in order during good times, so they can support economies when things go bad, blaming part of the slow recovery on weak government support.Yellen said that as the financial crisis took hold in 2008, central banks were forced to turn to unconventional tools such as large-scale bond buying programs to prop up their economies. The tools helped support domestic recovery and global economic growth, but more action from fiscal authorities would have been helpful, she said. 3.37pm GMT On Europe, Lagarde said ECB president Mario Draghis comments that the central bank was ready to do more to stimulate the flagging eurozone economy were perfectly legimate and appropriate.#IMFs #Lagarde: Some Euro Countries Risk 'Outright Deflation' 3.32pm GMT Central banks need to normalise policy as the global economy and inflation return to a more usual situation, said US Federal Reserve chair Janet Yellen, but this could lead to financial volatilily.In remarks prepared for the Bank of France symposium in Paris which she will deliver shortly, Yellen said the Fed was trying to clearly communicate its intentions on interest rates to minimise any surprises for global markets. Last week the Fed ended its bond buying programme, but markets are now awaiting the first rate rise, which is not expected to come until mid-2015. 2.43pm GMT Here is our full story on the US jobs numbers. The US unemployment rate fell to its lowest level since 2008 on Friday, in a move hailed as a sign of progress by economists despite 9 million people remaining out of work, writes Heidi Moore in New York. 2.40pm GMT European stock markets are still down, with the FTSE 100 the only major index that is trading higher at the moment, up some 20 points, or 0.3% at 6564.88. 2.39pm GMT On Wall Street, the Dow Jones opened some 40 points lower at 17514.56, a 0.2% drop, while the Nasdaq was flat. The dollar slipped initially after the headline non-farm payrolls figure came in lower than expected, but is now bouncing back as traders realise that the overall report is actually pretty strong. The figures support the Feds exit from the five-year quantitative easing, highlighting contrasting monetary policy between the US on one side, and Japan and eurozone on another, all to the favour of the US dollar. 2.31pm GMT The Russian central bank said a decision to intervene in the forex markets to prop up the rouble could be taken within several minutes and without prior warning. It considers the rouble undervalued and expects a certain correction in the exchange rate.Russian central bank hitting the panic button on FX http://t.co/o2lgjubu6h 2.24pm GMT Russias central bank said it is prepared to step up its interventions in the currency markets to defend the rouble at any moment. It added that it was willing to use other instruments (such as interest rates?) to support the currency. It also admitted that the situation is causing concern among the population. The rouble has lost nearly 30% against the dollar so far this year. The rouble is now down 0.54% on the day, less than before the statement. 2.17pm GMT Paul Ashworth, chief US economist at Capital Economics, concurs:This is a strong report that suggests the first rate hike is coming soon. We expect the Fed to start tightening in March next year. 2.14pm GMT Chris Williamson, chief economist at Markit, says:Buoyant labour market data, plus signs that the US economy is growing strongly despite slower growth elsewhere in many countries, adds to the likelihood of the Fed being the first major central bank to hike interest rates. Further robust data in coming months will fuel expectations that the first rate hike could occur early next year, earlier than current expectation of a mid-year hike, though policymakers will want to see wage growth revive before being comfortable with raising households borrowing costs. 2.04pm GMT On balance this was actually a strong report, despite the headline payrolls miss, concludes Marc Ostwald, strategist at ADM Investor Services International. He notes that the US underemployment rate dropped to a new cyclical low 11.5% from 11.8% and there has been significant acceleration in the fall in recent months, which will not go unnoticed by Yellen & Co. Payrolls were disappointing in terms of the breadth of payrolls gains, which were still heavily concentrated in lower-paid services jobs (retail & leisure/hospitality). Once markets delve into the details, they should come to the conclusion that the risks in terms of Fed rate timing is that they move earlier than June 2015. 2.00pm GMT European stock markets are still in the red, while the FTSE 100 index in London is holding on its gains. It is trading some 33 points higher at 6584.36, a 0.5% rise. Germanys Dax has slipped 0.2%, Frances CAC has shed 0.3%, Italys FTSE MiB has lost 0.9% and Spains Ibex is down 1%. 1.56pm GMT The US labour report for October doesnt really change the positive story on the US economy, says ING economist James Knightley. To recap: payrolls rose 214,000, which was a little softer than the 235,000 consensus, but there was a net 31,000 upward revision for the previous two months so in that respect the jobs number is pretty much in line with what was expected. Underemployment also fell nicely to stand at 11.5% while the proportion of people employed rose to 59.2%, the highest rate since 2009. The one real disappointment was on the wage front. Average hourly earnings continue to grow at just 2% YoY despite the employment cost index report suggesting that worker compensation costs are rising. Nonetheless, with unemployment continuing to fall, thereby shrinking the pool of available labour, we expect wages to eventually respond. While todays report is unlikely to have any major market implications, the underlying story for the household sector remains very positive. With employment rising nicely, gasoline and mortgage rates plunging and equities hitting new highs we should expect to see ongoing strong readings for consumer confidence and spending, which bodes well for 4Q GDP growth. Moreover, with the eurozone and Japanese central banks continuing to provide aggressive stimulus, the positive US dollar environment looks set to continue. 1.49pm GMT A little bit for everyone in the US jobs report... Jobs report is quite alright, better than the headline http://t.co/ull86lB7HiHere's your chart on US unemployment and non-farm payrolls gains - looking pretty pic.twitter.com/yQLuOst5vQ 1.44pm GMT At the same time, wage growth remains subdued. Average hourly earnings rose only three cents last month, leaving the year-on-year change at 2%, way below the pre-recession levels. 1.42pm GMT Job growth in the US has exceeded 200,000 in each of the last nine months, suggesting the recovery is pretty solid. 1.33pm GMT The non-farm payrolls figures are out. They show that 214,000 new jobs were created in the US economy last month, less than the 231,000 expected. However, Septembers increase was revised higher to 256,00 from 248,000 and August was also revised up to 203,000 from 180,000 so the overall picture looks better.Importantly, the jobless rate has fallen to 5.8%, the lowest since September 2008 when the financial crisis started. Economists had expected it to stay at 5.9% 12.57pm GMT The Banque de France conference in Paris has a panel discussion this afternoon with IMF director general Christine Lagarde and US Fed president Janet Yellen (3.15pm until 4.45pm GMT). 12.42pm GMT Returning to Mark Carneys comments earlier, my colleague Phillip Inman writes:The Bank of England may need to rescue trillion dollar financial markets in the next crisis following a shift in business lending from banks to the bond markets, Bank of England governor Mark Carney told a conference on Friday.Markets for bonds and derivatives could come under pressure in a repeat of the 2008 crisis and need the support of central bank funds following a structural shift away from bank lending, he warned. 12.38pm GMT Catching up on other news... Julian Rifat, a former trader at Moore Capital, has pleaded guilty to eight instances of insider dealing, the Financial Conduct Authority said today. He is the third person to plead guilty to insider dealing offences arising out of Operation Tabernula, the FCAs largest and most complex insider dealing investigation. He will be sentenced in the New Year. You can read the full statement on the regulators website. 12.15pm GMT The rouble edged higher this afternoon amid mounting talk that Russias central bank could act to halt the recent sharp slide. Analysts are warning of a full-blown currency crisis, with some urging the central bank to intervene.Having been in freefall this morning, tumbling over 3% against both the dollar and the euro, the rouble has clawed back some ground on hopes of an emergency central bank meeting. A source told Reuters that the banks governor Elvira Nabiullina was holding a meeting.This is full-blown panic, with signs of a self-fulfilling currency crisis. At such times, the central bank should intervene, after all if this isnt a risk to financial stability, then what is? 12.05pm GMT Its non-farm payrolls Friday! The numbers, due at 1.30pm GMT, will shed further light on the strength of the US recovery, particularly in the wake of the Feds recent ending of quantitative easing. Daniel Sugarman, market strategist at ETX Capital, says:While no-ones hurrying to stand in front of a mission accomplished banner just yet, the general feeling is that the US economy is strengthening significantly, and markets will be hoping that the Payroll numbers confirm this view. The estimate is for an increase of 231,000; in the past any result significantly above or below the estimated figure has caused significant market jitters. 11.59am GMT European stock markets have turned negative, dragged down by banking shares, while the FTSE is still up. The Dax in Frankfurt has slipped 0.35% while the CAC in Paris is down 0.6%. Spains Ibex has lost 1.2% and Italys FTSE MiB is 1.1% lower. The London stock market is still trading some 37 points higher, at 6588.60, a 0.6% gain. 11.54am GMT Earlier, data showed Frances industrial production output slipped 0.1% in September. German production saw a small rebound from Augusts decline, but economists are still worried that the country is sliding back into recession.What does this mean for the eurozone as a whole? Jonathan Loynes, chief European economist at Capital Economics, says:Eurozone production is still likely to have contracted in Q3, pointing to weak or even negative growth in GDP.Overall, the figures suggest that next weeks German and eurozone GDP figures for Q3 will make for depressing reading and suggest that the ECB should complete its preparations for full-blown quantitative easing as quickly soon as possible. 11.50am GMT The session has finished, and Carney et al. are heading to lunch. Or rather, déjeuner, as the programme states. 11.29am GMT Here are some more detailed quotes from Carney, courtesy of Reuters.Turning to the implicit subsidies effectively too-big-to-fail and the likelihood of government support trust me, when things were under stress, that subsidy was massive. It has come down, it has not been eliminated, but that is because we are still working to end too-big-to-fail.The point of all this is that under-capitalising institutions [and] implicit subsidy conferred a large advantage on bank-based finance, and not just lending but trading book finance by banks. Were working to restore market discipline. 11.24am GMT BlackRock boss Laurence Fink concurred:Its up to all of us to make markets safer and sounder and more robust. 11.13am GMT Carney finished by talking about the Bank of Englands fairer markets investigation. Recommendations will be published by June next year.For markets to be effective, they also have to be fair. 11.07am GMT Carney said in Paris:We are changing the incentives in the banking system.Since the crisis of 2008, virtually all credit growth has been in the capital markets. So banks have been given a series of incentives aside from capital to focus on their more traditional responsibilities [e.g. bank loans]. 10.59am GMT Carney has taken the podium to talk about increased capital requirements for banks and too big to fail banks. 10.57am GMT In Paris, Danièle Nouy, president of the ECBs supervisory council, is talking about shadow banks. Mark Carney is there too but is unlikely to say much (if anything) on when UK interest rates will go up. Next Wednesdays quarterly inflation report will shed more light on the Bank of Englands thinking. 10.54am GMT The pound hit a 14-month low against the dollar after the UK trade data, which showed the deficit widening more than had been expected. Sterling fell as low as $1.5802, its lowest level since September 2013. Against the euro, it lost 0.2%, to 78.34p. 10.37am GMT Meanwhile, back in London we could get a settlement for currency rigging as early as next Wednesday, Reuters reports, citing people familiar with the matter. Six major banks caught up in the investigation into forex rigging are being pressed by the regulator, the Financial Conduct Authority, to accept fines possibly as much as £1.8bn, we reported in September. 10.32am GMT In Paris, the session with Mark Carney and others has got under way. You can watch it here. It is entitled Sadapter aux changements dans lintermédiation financière and is chaired by Bundesbank president Jens Weidmann.Hyun Song Shin, a former economics professor at Princeton, is speaking first, followed by a 30-minute debate between Carney, BlackRock boss Laurence Fink and Danièle Nouy, president of the ECBs supervisory council. 10.25am GMT Before we switch to the central bankers symposium in Paris, some instant reaction to the UK trade data.Alan Clarke, at Scotia Bank, says:This series is like a yo-yo. You get one good month, one bad month, one good month and so on. There has been no change in the trend - net trade has contributed very little to growth of late and there is little sign of that changing any time soon.It is the lack of domestic demand in the eurozone that means we struggle to increase our exports as much as our imports. This is probably because continental European consumers and businesses are demanding less of everything and there is not an awful lot that we can do about that apart from watch and wait for the Eurozone recovery to gain traction, or try to export more to elsewhere on the globe.Looking ahead, exporters are likely to struggle further over coming months given the strong pound and weakness in the euro-zone. But with UK exports still competitively priced in foreign currency terms, we remain optimistic that exporters will benefit from stronger global growth next year and that the economy can still rebalance gradually towards the external sector over the medium term.It is disappointing to see the UKs trade deficit widen in September after some encouraging figures the previous month. While monthly figures can be erratic, the trade deficit also widened in Q3 as exports fell and imports rose. In September, the UK recorded its largest ever deficit in goods trade with Germany, partially offset by improvements in trade with China and Hong Kong. We must drastically change our approach to supporting exporters as we are failing to make adequate progress towards rebalancing the economy. The government must introduce further measures to support UK exporters around the world, including the growing economies of Asia. 10.07am GMT Back to the German data. German exports rose sharply in September, by 5.5%, almost offsetting Augusts 5.8% drop. But economists say this, coupled with a rebound in industrial output, may not be enough to ward off a recession. The German economy, Europes largest, shrank 0.2% in the second quarter and another drop in the third quarter figures are out next week would put the country back into recession. 9.57am GMT European central bankers and economists have gathered in Paris for a symposium at the Banque de France. Central banks should be prepared to buy government bonds if yields surge, or to ward off the threat of deflation, said Christian Noyer, governor of the Banque de France and a member of the ECBs governing council.In extreme circumstances a central bank should mitigate the effects of confidence shocks on sovereign yields by purchasing government bonds.Such an action may be vindicated if there are risks to macroeconomic or financial stability or even if self-fulfilling runs on public debt may be a threat to market access, or lastly to avoid the deflationary consequences of a public debt event. 9.39am GMT Bank of England governor Mark Carney is speaking this morning in Paris. He will be on a panel at the International Symposium of the Banque de France, at 10.15am GMT. Webcast at banque-france.fr/en/home.html 9.38am GMT UK trade figures out just now show that Britains trade in goods deficit widened more than expected in September as exports to the EU were sluggish, and oil imports jumped.The Office for National Statistics said the trade gap ballooned to £9.8bn from £8.95bn in August. Oil imports surged nearly 28%. 9.33am GMT The ECB will suspend crisis loan repayments over the Christmas/New Year period. It said this morning it would not conduct early repayments of its long-term refinancing operations between 24 December and mid-January. The last repayment of 2014 will be settled on 23 December. Repayments will resume on 14 January. Like last year, the ECB decided to suspend repayments of the three-year LTROs during the year-end period, in view of the expected low interest and the concentration of other operations owing to public holidays. 9.22am GMT Over in Germany, industrial production bounced back 1.1% in September, after a 3.1% drop in August. The rebound was mainly driven by manufacturing, up 1.7%, capital goods (up 4.5%) and energy (up 2.4%). Too little, too late? asks Carsten Brzeski, economist at ING. He says this mornings data from Germany show that not all is gloom-and-doom in the eurozones biggest economy. However, the rebound of industrial production was probably not enough to get rid of all recession fears.Over the last weeks and months, the German economy has been a mystery. The slowdown story which was told by partly terrifying data, particularly from industrial activity, has not always matched gut feeling, anecdotal evidence and undebatable solid economic fundamentals. Nevertheless, it would be naïve to simply deny clearly disappointing data. At the current juncture, however, and from an analytical point of view, it is still too early to come up with an all-encompassing explanation for what is happening right now in the German economy. Is the slowdown mainly the result of an abnormal volatility caused by weather effects, vacation days and the timing of school summer holidays? Or is the current slowdown the result of several weaknesses in many trading partners and, even more important, the gradual end of the positive reform-growth cycle the economy has been in for the last decade? In our view, it is a combination of the two. 9.17am GMT The dollar is hovering close to a 4 1/2 year high against a basket of currencies, buoyed by recent strong data for the US economy. The dollar index touched a high of 88.174, its highest level since June 2010. The non-farm payrolls numbers at lunchtime could give the greenback a further lift if they point to a solid recovery in the jobs market. Most economists think some 231,000 new jobs were created in October, compared with Septembers strong reading of 248,000.We are expecting a reading of 240,000 and anything about that, in the region of 250,000 could send the dollar higher. 9.08am GMT Among todays stock market losers, car insurer Admiral, which owns price comparison site Confused.com, stands out. Shares fell as much as 3.7% after the company posted a drop in turnover amid fierce competition. Rival RSA fell 2.7%.Admiral boss Henry Engelhardt said:We anticipate that future earnings will be impacted by the decline in premiums experienced across the market in recent years, coupled with a return to higher claims inflation. 9.01am GMT The FTSE 100 continues to march higher and is now trading 0.7% higher, or 45 points, at 6597.08. Royal Mail is one of the biggest risers, up as much as 3.3%, after a positive broker note. Goldman Sachs decided to resume its coverage of the company with a buy rating.The FTSE hit a peak of 6904.86 in early September, its highest level since the start of 2000. In October, weak European economic data dragged down stock markets, including the London market, which slumped to 15-month lows. But it has clawed back ground since then. 8.46am GMT In other corporate news, the company that controls Londons Canary Wharf, Songbird Estates, has rejected a joint takeover bid worth £2.2bn from the Qatar Investment Authority and a US commercial property firm.National Grid has seen first-half profits climb 16% to £1.1bn. The electrical and gas utility firm has formed a joint venture (called St William) with property developer the Berkeley Group, to build 14,000 homes across London and the south east. National Grid owns a big portfolio of surplus brownfield land which it wants to release for development. The first homes will be ready in 2017. National Grid has over 20 sites in London and the South East with the potential to provide over 14,000 homes over the next 10-15 years. In its first phase, St William aims to develop more than 7,000 new homes, including over 2,000 affordable homes. Development at this scale would also deliver 5,500 jobs, 2 new schools and 22 acres of public open space, transforming 84 acres of former industrial land and contributing over £150m to local infrastructure and amenities. The joint venture will have funds available of up to £700m, making it one of the top ten house-builders in Britain by turnover. This is new capital which will deliver additional homes and help tackle the housing crisis. It aims to commence development activity on its first site in 2016, with the first homes being delivered in 2017. 8.18am GMT All the main European stock markets are up. The FTSE 100 index has opened more than 25 points higher at 6576.68, a 0.4% rise. The Dax in Frankfurt is also 0.4% higher while the CAC in Paris has edged up 0.2%. The FTSE MiB in Milan is flat and Spains Ibex is 0.4% ahead.Upbeat corporate results from major European companies including steel titan ArcelorMittal have lifted markets. The worlds largest steelmaker, which makes 6% of the worlds steel, beat analysts expectations with third-quarter profits. 8.15am GMT Good morning, and welcome to our rolling coverage of the financial markets, the world economy, the eurozone and business.Wall Street and the dollar surged yesterday fuelled by optimism about the US economy, with the Dow Jones and S&P 500 closing at new records. Continue reading...
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